The “Little” Things that Count
Internet Ads and the FTC

By Jon Lee Andersen

Although it has been ongoing for a number of years, it seems that recently, I noticed that at almost every website I visit, I am a winner of something. While most of the “prizes” are junk that had little interest for me, on several of the notices the prize was a new computer, complete with a keyboard, speakers and a monitor. Being somewhat skeptical about my good fortune, and remembering my father’s frequent reminder that there are no “free lunches”, I decided to examine some of the prizes more closely. When I finally got to the details surrounding the “free” computer, I learned that I would be (a) signing up for several credit cards, and transferring balances to these new cards or (b) signing up for about 10 years of some type service at a price far in excess of value and for something I would never use, plus (c) a lifetime of email on forthcoming special offers.

This little exercise prompted me to review briefly what the rules and regulations are for advertising offers of this type. The Federal Trade Commission in one of its “FTC FACTS for Business” publications addresses the situation straight on. Here are the some of the salient points of the FTC’s policies:

o First, remember that the general principles of advertising law apply to Internet advertising just as they do to all other forms of advertising, marketing and promotions.
o Second, and here is something that many advertising agencies are not aware of, (so I quote for the FTC publication): “Sellers are responsible for claims they make about their products and services. Third parties - such as advertising agencies or website designers and catalog marketers - also may be liable for making or disseminating deceptive representations if they participate in the preparation or distribution of the advertising, or know about the deceptive claims. Advertising agencies or website designers are responsible for reviewing the information used to substantiate ad claims. They may not simply rely on an advertiser's assurance that the claims are substantiated. In determining whether an ad agency should be held liable, the FTC looks at the extent of the agency's participation in the preparation of the challenged ad, and whether the agency knew or should have known that the ad included false or deceptive claims.
o Third, there are always new rules and policies or revisions to old rules and policies that must be followed, such as the recent changes to the rules governing testimonials and endorsements.

Here are some of the more specific rules and guidelines for Internet advertising and products promotional offerings:

 Where the offer involves a rebate arrangement, the advertising must prominently state the before-rebate cost of the item, as well as the amount of the rebate. This is the only true way to provide a consumer with the necessary information to analyze an offer and to comparison shop.
 Requirements to purchase Internet services must also be prominently (that word again!) disclosed. The disclosure should cover the cost of the service, the duration of the required commitment, any penalties of fees associated with early cancellation, any additional connection charges, and whether local internet service is available.
 The components of an offer should match any visual representations of the offer. For example, if the picture of the computer shows the CPU, a monitor, keyboard and speakers, the offer should include all of these components. If it does not, any of the items not included must be described very clearly and prominently.
 Important information concerning an offer must be conspicuously placed in the advertising. For example, terms about the basic cost of the product must be located near the advertised price. And of course there are the usual precautions against hiding details in obscure locations, burying them in densely packed lines of fine print or obscuring them in small-type footnotes.
 Information concerning details of an offer should also be disclosed on the same electronic page as the offer, not on a pop-up window or in a hyperlink. Where hyperlinks are used, the link should be labeled so that it shows the importance, nature and relevance of the information in the hyperlink, i.e. “Early cancellation of Internet Service resulting in substantial penalties. Click Here”

While most of these rules and guidelines seem pretty self evident and should be followed as standard practices for advertisers, reviewing them when planning a new advertising program or promotion is still a good idea.

It’s like this:

When the model appears dishabille
It enhances an offer’s appeal
But the terms and conditions
Not prominently mentioned
Make the offer a really bad deal

© December, 2009 Jon Lee Andersen All Rights Reserved